By Richard E. Weltman

NJ Court: Bank has Duty to Prevent Injury in Foreclosed Home By Richard E. Weltman{1:54 minutes to read} Wells Fargo Bank, as the owner of a foreclosed home in New Jersey, owed a duty of care to a prospective homebuyer who was injured when she tripped on a piece of glass while touring the home, a federal court judge in Newark ruled on January 28, 2015.

In reaching his decision, U.S. Magistrate Judge Michael A. Hammer explained that commercial lenders taking possession of a residential property through mortgage foreclosure assume the position of the owner, and thus assume the owner’s non-delegable duty to protect visitors from reasonably foreseeable injuries due to potentially dangerous conditions.

Judge Hammer rejected Wells Fargo’s argument that the broken glass could not have been foreseen, finding that just before the accident local law enforcement reported a squatter in the home. The court concluded it was reasonably foreseeable that the foreclosed property was vulnerable to damage caused by the squatter or another person entering the home without permission or notice.

Judge Hammer concluded that “even a vacant owner is in a superior position to ensure the property is adequately maintained than the invitee, who has neither the ability nor the duty to ensure there was no dangerous condition on the property.”

The court determined that public policy concerns support a finding that the secured lender owed a legal duty to perform periodic inspections in order to learn of, and correct, dangerous conditions in bank-owned REO (Real Estate Owned) property acquired through foreclosure.

The ruling makes clear that commercial lenders marketing foreclosed bank-owned property must exercise reasonable care by hiring appropriate caretakers to perform regular maintenance and upkeep. Here, the maintenance contractor and realtor were also found to owe a duty of care to potential homebuyers and other visitors.

About Weltman & Moskowitz, LLP, A New York and New Jersey Bankruptcy, Business and Creditors’ Rights Law Firm:

Richard Weltman & Michael Moskowitz |

Founded in 1987, Weltman & Moskowitz, LLP is a business law firm concentrating on creditors’ rights, bankruptcy, foreclosure, and business litigation. Richard E. Weltman is a partner with the firm, focusing on business and bankruptcy litigation, as well as corporate counseling, M&A, and transactional matters. Richard can be reached at (212) 684-7800, (201)794-7500 or Melissa A. Guseynov, an associate of the firm, contributed research and reporting to this article.